ISM Code – does it meet the expectations?

When the ISM Code was introduced many expectations were born. First of all the industry hoped that it would eliminate the substandard operators and create a new ‘safety culture’. This scenario did not come happen. Adoption of the Code, as many other international standards, has and will continue to have a gradual effect over many years. The shipping industry is very unique and complex, yet it faces structural problems with regard to the drafting, implementation and enforcement of regulations. As a consequence the ISM Code 'suffers', because it is based on implementation of all other IMO conventions and lack or improper implementation of one of the conventions results in feeble implementation of the ISM Code.

13 _{While this dissertation is being written, PRS has been temporarily excluded from IACS}

After two years experience of practical exacting compliance, several inherent weaknesses of the ISM Code have been discovered. The first of them comes from the Code’s origin which is the ISO 9002. As in the company certification for compliance with the ISO 9002 Standard, the external auditor of the ISM Code is not authorised to verify procedures prepared by the company. The ISM audit confirms only the observance of these procedures onboard and onshore but does not approve their safety and adequacy for specific purposes.

Another deficiency of the ISM Code is its terminology. Many terms, like ‘resources and personnel’ or ‘company’s authority’, were transferred from the ISO vocabulary, which was prepared mostly for companies designing or producing goods. Regardless of its unsuitability for a servicing company, this terminology is new to the shipping industry and creates many difficulties during seafarers’ familiarisation with training instructions. Since the ISO is changing its Standards by the end of the year 2000 to make them more suitable for all kinds of industry it might be worth thinking about changes to the ISM Code terminology while amending it due to more serious insufficiencies.

In the author’s view, the ISM Code is still too remote from other IMO conventions and requirements. Although it should encourage implementation of other mandatory instruments the verification is very often done separately for the Code and for other safety requirements. Regardless of the ISM Code’s main objective, that is establishment of safeguards against all identified risks, the IMO Maritime Safety Committee has decided that a Formal Risk Assessment is ‘outside the scope of the ISM Code’.

Moreover, the Code has been created, inter alia, to reduce human errors or omissions which are the main cause of marine casualties. The SMS procedures, although very helpful, tend also to create problems. This is additional paperwork for the crew and extra stress originated by additional inspections (internal and external audits as well as PSC). To attain full success of the Code the industry must also reduce paperwork

created by the ISM Code to a necessary minimum as well as minimise the number of inspections. With the introduction of the ISM Code the number of existing statutory surveys and inspections should decrease since the Code integrates all requirements for vessels and their crew. Unfortunately this did not happen and one of the reasons might also be lack of confidence within the industry in the Code and in the quality of inspections.

Above all, the introduction of the ISM Code is one of IMO great successes. The first phase of implementation, with the July 1 1998 deadline, applied to all passenger ships, oil and chemical tankers, bulk carriers, gas carriers and high-speed cargo ships over 500 gross tonnage, and the companies that operate them. This affected approximately 13,000 ships and 7,000 companies. From all of these about 87% had their DOC and SMC on time (Norwegian Shipowners Association, 1998). None of the IMO previous, mandatory obligations have reached that level of compliance. Yet phase 2, with a deadline of July 1 2002, will affect another 20,000 ships.

However, looking back at the statistics, more then 50% of all SMC’s were issued during the last 6 months before the deadline (Einarsrud, 1999, pp. 9-13). The meaning of these certificates could be questioned. Do they really prove that the company as a whole have implemented the system or might it be that they are just worthless papers to avoid detention by a port State control (PSC) officer? The statistics do not give a comprehensive answer to this question.

In the period from July to September 1998, under the Paris and Tokyo Memoranda of Understanding (MoU) on PSC, intensive inspection campaigns on ISM Code compliance on more than 3,300 ships to which the ISM Code applied was conducted. The detention ratio due to ISM Code non-conformities was 5.1% under the Paris MOU and 3,6% under the Tokyo MOU. (Einarsrud, 1999, pp. 9-13). Apart from certificates and particulars not being in order or on board the following non- conformities were the most frequent:

- no routine maintenance records being available,

- programs for drills and exercises to prepare for emergency actions not being available.

From the above data, it can be seen that the Code was implemented under time pressure. Although efforts made by shipping companies could be sufficient to gain certification, many have doubts that it was sufficient to actually improve safety and working practices on board ships or management systems ashore, that it had changed the company’s culture.

The PSC inspections do not indicate other existing problems, mainly due to limited authority of the inspectors, as presented before. The ‘grey area’ is related to the ISM Code expectations from company management, especially regarding definition of authority and levels of communications. This is the basic foundation of QMS, however managers very often deliberately leave it not clarified. In case of an accident if the responsibility can be traced to the crew the company will be entitled to obtain insurance coverage. This may not be the case if it is proved that the manager himself was liable.

As Arne Sagner summarised in July, 2000 the ISM Code has led to a three-way effect throughout industry. The top 20 per cent of the shipping companies demonstrate operational benefits from implementation, the bottom 20 per cent are the ‘rule benders’ who don’t want any new code and don’t implement it regardless of the consequences and the middle 60 per cent manage to obtain the certificates and for them the improvement of safety culture has finished at that stage.

The managers of shipping companies are not consistent in their opinions about the ISM Code. Mr. du Moulin, chief executive of Marine Transport Lines of New Jersey, said in the Shipping Times in March 1998 that, though the cost of compliance was high, his company will recover it in the long run because of lower insurance premiums and damage losses. He said 'it took the company two years to implement the ISM system and an additional 12 months to get all 22 ships with their safety

certificates on board. Excluding people's time, this cost Marine Transport Lines approximately US$750,000'. He estimated additional running costs of about US$200,000 a year plus two full-time salaries. However, the company's P&I insurance has dropped by about US$200,000 per year, and hull insurance also by US$200,000, Mr. du Moulin said also that ‘the number of incidents has dropped from 58 to 20 over a three-year period’. Others, less successful, do not want to talk about it or only complain about the cost and paper work.

The studies carried out by some of the CSs have confirmed that a growing number of shipowners is now discovering the benefits of the ISM Code, especially regarding the emergency preparedness which has been improved through better hazard identification and better structures of emergency plans. The negative effects reported are the high costs of implementation and too extensive paperwork.

Likewise, in the case of other international conventions the effect of the ISM Code on the shipping industry varies between different regions and companies. At the company level the differences are caused by the manager’s approach towards SMS. If management understands the principles of the Code, if it considers it as a tool to decrease human error and increase safety through better management system, it is more likely that the Code will have a positive impact.

At the international or regional level deviations result from different ways of implementation of the ISM Code by Flag States. Each FS can appoint its own audit body and, consequently, the scope of wide variations in the interpretation and standards of audits is observed. Besides there can be regional differences that are taken into consideration by individual States when developing their domestic law. For Poland, the European Union establishes such regional requirements and for this reason the EU approach toward quality and safety management needs to be scrutinised before speaking of the Polish domestic system.

CHAPTER 4